RBI Governor Sanjay Malhotra announced a 25 basis point cut in the repo rate, reducing it from 6.5% to 6.25%. This is the first rate cut since May 2020 by the Monetary Policy Committee (MPC), which sets the repo rate for RBI’s lending to commercial banks.
The repo rate was cut by 25bps, and adjustments were made to the Standard Deposit Facility and Marginal Standing Facility. The MPC decided on a “neutral” policy stance to provide flexibility for the RBI under changing economic conditions, as stated by Governor Malhotra.
Malhotra has forecasted India’s FY26 GDP growth at 6.7%, expecting a decrease in food inflation. GDP growth is projected to be 6.7% in the first quarter, rise to 7% in the second, and then hold at 6.5% for the third and fourth quarters of FY26.
The RBI Governor forecasts inflation at 4.8% for this financial year and 4.2% for FY26. He assured that RBI’s exchange rate policy focuses on reducing volatility rather than fixing specific rates, addressing recent currency depreciation concerns.
The recent rate cut follows the Union Budget for FY26. Previously, the RBI raised the repo rate by 250bps from May 2022 to February 2023, but it has been steady at 6.5% since April 2023 to control inflation and reach a 4% target.
Sources News From Various Digital Platforms, Websites, Journalists, And Agencies.
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